Early Breakfast withAbongile Nzelenzele

General Electric was co-foundered when Thomas Edison launched a single company incorporating his various companies at the time. The portfolio covered power generation and transport, but was publicly known for the first commercially successful electric light bulb.

To last over a century and remain at the forefront of innovation is almost unique to GE and the current plans to continue a decade long restructure that may see the company sell its consumer lighting division not in desperation but on purpose is part of what has allowed it to survive when other have faltered.

It may seem surprising, but it fits with a long cycle of how GE has identified and responded to changes in the markets and it suggests that they have not only learnt from their history but could be cleverly looking to repeat it.

Create demand then service it

When electric power stations were first created, there was a huge potential market, but people who have lived without electricity had no real need for it. It would be similar to your view of a mobile phone before they were released.

The power industry realised that residential power demand would increase if they could demonstrate a better lighting option than gas and candles which saw the race to create a bright, clean and cheap light bulb, it was Edison’s company that both found a useful version but also managed to publicise the bright invention which was to create the link between innovation, light bulbs and bright ideas.

Businesses and residential customers were eager to get the new technology with the growing supply further increasing demand.

After the light bulb got electricity into homes, GE could look to supply new appliances that would work with the wonder energy source.

They had also invested in the transport industry building locomotives and engines including what was at the time the largest locomotive built and thanks to a more recent one, still is.

The Great Depression might has signalled the end of a consumer business relying on the sale of what was still a luxury appliance, but they opted to offer their products on finance.

In the following decades these industries and their business to finance them grew to be its biggest revenue source, after 2008 they have scaled that back. Currently it is their transport business that delivers the lion share of their revenue building diesel-electric trains and using the same electric motors in the mining and marine sectors.

The potential decision to sell the consumer lighting division comes after it had recently sold off it consumer appliance business.

The strategy is to target business focused products as the revenue for the supply and service of those contracts are more substantial and longer lasting than the rapidly changing and highly competitive consumer sector.

GE developed LED lighting in the 60’s, and as it remains the strongest potential source of lighting in the future, they will retain their LED lighting division even if they do sell the other lighting operations.

After building engines for transport they also invested and have built a aircraft engines. It was a good move as global aviation has not only seen strong business over the years, but much of the technology has also helped it secure contracts with the US military.

Other investments in the energy sector included oil and gas and even nuclear although it was GE that designed the Japanese nuclear reactors that failed following the devastating tsunami in 2011.

They have a long and significant connection to media with RCA being created by GE to create the first radio broadcasters and were also instrumental in the first TV broadcasts, supplying the industry equipment and the consumer sets used to consume it. In the 80’s they bought the broadcaster NBC and retained them until 2013.

It has interests it the medical field too where it innovated the MRI scanner and the company boasts two Nobel prize winners.

That is not to say it has not had its fair share of errors and scandal. The company manages to pay very little if any tax despite making most of its profits in the US and while not alone it actively would seek to get consumers to replace their GE products sooner than necessary.

These activities while not the markings of a good corporate citizen are not unique and may even have been acceptable at the time.

This piece though can’t cover the full extent of the business, but looking at what is unusual about it has been their focus on the future, the strategy to favour the business sector ahead of the consumer sector while understanding the potential synergy between the two. And perhaps most importantly not using its historic connection to an industry to prevent it expanding into or focusing on a new one.